Report for the second quarter 2023

• Demand for Krones’ products and services remains very good. Customer orders “normalised” at a high level in the second quarter of 2023 with an order intake of €1,272.8 million. From January to June 2023, order intake was €2,785.9 million, only 10.3% below the extremely high record figure for the same period of the previous year (€3,106.4 million).
• Krones’ revenue developed well between January and June, despite the persistently tight situation in the procurement of electronic components, rising by 16.9% to €2,320.9 million.
• The company significantly improved its profitability in a challenging environment. Earnings before interest, taxes, depreciation and amortisation (EBITDA) went up by 26.4% in the reporting period to €221.4 million. The EBITDA margin improved to 9.5% (previous year: 8.8%).
• Krones has raised its guidance for revenue growth in the full year 2023. The Executive Board now expects revenue growth of 11% to 13% (previously 8% to 11%). The guidance for the other two financial targets is confirmed. The company aims to further improve profitability and forecasts an EBITDA margin of 9% to 10% in 2023. For return on capital employed (ROCE), Krones expects an increase to between 15% and 17%.

* PP = percentage points
** Cash and cash equivalents less debt
*** Average of last 4 quarters

Dear shareholders and friends of Krones,

Following a successful first quarter, the second quarter of 2023 also went well for Krones. The restrained growth of the global economy had little impact on our business. Customers in the international food and beverage industry remain very keen to invest. The contract value of orders in the first half of 2023 totalled €2.79 billion. Our order intake was thus only 10.3% below the extremely high record level set in the previous year. Based on the feedback we have received from our customers following discussions on their investment plans, we expect the positive trend in orders to continue. Order intake in the coming quarters is expected to remain at around the good level of the second quarter of 2023.

Thanks to the strong demand for our products and services, our order backlog continued to grow in the second quarter of 2023 despite a year-on-year increase in output. At the end of June, Krones had an order backlog totalling €3.9 billion. We are concentrating on working through this huge order backlog with the usual Krones quality, while meeting our delivery deadlines.  The aim is to reduce delivery times for our products.

In the first two quarters of 2023, our productivity suffered from the shortage of electrical components. Thanks to the great flexibility and creativity of the entire Krones team, however, we were able to maintain output at a relatively high level in the first half of 2023. From January to June, revenue increased by 16.9% year on year to €2.3 billion. At the same time, under difficult conditions, we improved our EBITDA margin to 9.5% (H1 2022: 8.8%).

Krones will step up the pace of production in the second half of the year in order to meet delivery dates and limit further growth in the order backlog. Better availability of electrical components and higher overall production capacity utilisation will also contribute here. On 17 July 2023, based on the current production planning, the Executive Board raised the full-year guidance for revenue growth in 2023. Krones now expects revenue to be between 11% and 13% higher than in the previous year (previously 8% to 11%). We have confirmed our guidance for the EBITDA margin at 9% to 10% and for ROCE at 15% to 17%.

All in all, Krones is well on the way not only to meeting its targets for 2023, but also to achieving profitable growth in the future. Krones is supported in this by the new target picture, “Solutions beyond tomorrow”, which is already well established throughout the company. The Krones Executive Board is confident that the Krones team is making an important contribution to a future on our planet that is worth living in, sustainable and successful.

Christoph Klenk
CEO

Krones raises guidance for revenue growth in full year 2023

Krones came well through the first half of 2023, despite continuing uncertainty in the economic environment. At the same time, business conditions remain challenging for Krones due to various unpredictable factors that could affect the company’s business processes and production. These include geopolitical risks in Europe and other parts of the world, as well as high inflation and interest rates in many countries. Material shortages and problems in global supply chains also remain a source of uncertainty. We expect that the situation on the procurement markets relevant to Krones, especially for electronic components, may ease over the course of the second half of 2023.

Our markets continued their stable growth, which is hardly affected by economic cycles. Demand for Krones’ products and services remains strong. Krones’ total operating performance developed well in the second quarter of 2023, despite the persistently tight situation on procurement markets. This is attributable to the great commitment, creativity and flexibility of the company’s workforce.
On 17 July, on the basis of current production planning for the second half of 2023, the Executive Board therefore raised the full-year guidance for revenue growth in 2023 to between 11% and 13% (previously 8% to 11%).

At the same time, Krones has confirmed the guidance for the remaining financial targets. The company aims to further improve profitability and forecasts an EBITDA margin of 9% to 10% for the Group in 2023. For the third performance target, return on capital employed (ROCE), Krones expects an increase this year to between 15% and 17%.